The Sunday Mail
Vision 2030
Allen Choruma
Parastatals play a pivotal role in the development of our country and currently account for 25 percent (at peak 40 percent) of the country’s gross domestic product (GDP).
Infrastructure development and service provision is dominated and often monopolised by parastatals in areas such as roads, aviation, rail, water and sanitation, power generation and distribution, health, tourism, telecommunications, agriculture, education, financial services and so on.
The operation of parastatals is a matter of public policy and concerns all citizens of Zimbabwe.
Although Government is the shareholder in these public entities, it does so at the pleasure of citizens — the taxpayers.
The risks and losses in parastatals are not borne by Government, they are passed to ordinary citizens who bear the responsibility of paying taxes. These fund the operations of parastatals. During times of need, the funds are also used to bail out the parastatals through Treasury.
Corruption
The Auditor-General has on numerous occasions highlighted governance concerns at public entities, which are so serious as to threaten their viability and the country’s economic development prospects.
The governance weaknesses, which manifests through weak internal control environment, open up public entities to corruption, fraud and misuse of public resources, among other malfeasance. It impacts negatively on economic development and service delivery, especially to the vulnerable and poor.
A few months ago we witnessed the dismissal of Zimbabwe Electricity Supply Authority’s CEO.
The dismissed CEO, together with the suspended CEOs for the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and the Civil Aviation Authority of Zimbabwe (CAAZ), recently appeared in court on allegations of abuse of office.
The CEO for Zimbabwe National Roads Administration (Zinara) have also been in the mainstream media, embroiled in allegations of corruption and abuse of office.
National Social Security Authority (NSSA) still does not have a substantive CEO following the departure of its former CEO in 2018 under unclear circumstances.
New brooms
Parastatal transformation and improved operational performance and efficiency cannot be achieved without human capital restructuring.
This calls for deployment of skilled people who prioritise national interests ahead of personal gain, people who are capable of steering the country towards sustainable growth and development in line with Vision 2030.
The recent wave of corporate scandals and poor performance in strategic parastatals clearly shows that it’s high time we have “new brooms” to head our parastatals at board and executive management levels.
It is said “new brooms” sweep the cleanest.
It is also a widely held public view that boards, CEOs and management in public entities tend to overstay.
This causes general stagnation and deterioration of these entities due to attrition, lack of innovation and leadership renewal, hence the need to deploy “new brooms” at both board and senior management levels to sweep the debris and turn around these entities.
Boards
Boards of directors play a very pivotal role in the governance of public entities.
The new Minister of Energy and Power Development, Advocate Fortune Chasi, has taken an aggressive but informed stance in dealing with the corporate governance issues of the parastatals he superintends.
He has set the right corporate governance tone from the top as evidenced by the recent dismissal of the entire Zesa board.
It sends a clear message of his intent.
We need a complete overhaul of parastatal boards and ensure that whoever is appointed on these boards has the requisite skills, experience, competencies and, above all, commitment to public service.
Appointments to parastatal boards have often been questionable, leaving people to wonder if the selection process was transparent, fair and based on merit.
Rotating directors from one parastatal to the other often presents problems as this may lead to recycling incompetent directors.
We also need gender balance on public entities’ boards. Most boards are male-dominated and this should be addressed. A report by Zimstat (Zimbabwe National Statistics Agency), “Understanding Gender Equality in Zimbabwe: Women and Men Report, 2016”, shows that out of the 100 State-owned enterprises (SOEs) surveyed, there were 23 women CEOs (23 percent) and 77 men CEOs (77 percent).
Out of the 100 SOE boards, there were 29 percent women directors and 71 percent men directors.
There is overwhelming empirical evidence linking increased participation of women on boards and senior management to performance.
The Corporate Governance Unit (CGU) within the Office of President and Cabinet (OPC) has been working tirelessly to create a directors’ database for public entities.
The OPC issued advertisements in the mainstream media calling Zimbabweans with requisite experience and skills to register with it for consideration for appointment on public entities’ boards.
It is hoped that this exercise will bear fruit and that the directors’ database will be used fruitfully.
CEOs
All responsible line ministers should conduct a thorough audit of parastatals under their portfolio and ensure that all poor-performing CEOs are replaced with competent, skilled, dedicated and experienced personnel.
It is common to find parastatal CEOs who have overstayed in office to the extent that they are no longer innovative and productive.
We need to blend age and experience in our public entities.
Younger CEOs with energy, zeal and innovation are needed to run our strategic public entities.
Recycling the “old horses” has diminishing returns considering how technology has advanced over the years and also the dynamics in the regional and global financial and trading landscape.
Public entity CEOs should be men and women of distinguishable attributes with strong work ethics and proven track records. They should be disciplined and dedicated to serve the nation.
Those keen on lining their pockets and making quick money should not assume positions of leadership in parastatals.
It should also be noted, lest we forget, that at times parastatal CEOs often fail to deliver because the environment they find themselves operating in is not conducive and supportive, not because they are incompetent.
Government responsibility
In pursuit of Vision 2030, Government should ensure that parastatals serve their statutory objectives for advancing political, social and long-term economic growth, while at the same time operating viably and efficiently without exerting burden on State coffers and taxpayers.
Ministers should give policy and strategic guidance to parastatal boards and CEOs in line with Vision 2030 goals.
Ministers should ensure that parastatals under their ambit receive adequate support from Government, making it possible for them to play a pivotal role in the attainment of Vision 2030.
The recently promulgated Public Entities Corporate Governance Act (Chapter 10:31) is a governance framework that should be put into use by Government to promote good corporate governance in parastatals.
Political will is needed to ensure that the provisions of this Act are applied in spirit and intent to ensure that parastatal boards and management stick to their mandate and ensure that the institutions they head fulfil national objectives and goals.
To allow parastatal boards and CEOs to operate efficiently without undue interference and bureaucracy, there should be a clear separation of powers and responsibilities.
Government, through line ministers, should not be involved in the day-to-day management.
The administration of parastatals should be left to boards and management, except in exceptional circumstances.
Government’s oversight role should be within the legal (Acts of Parliament) and governance framework of parastatals.
Undue Government interference in running of parastatals often drives boards, CEOs and management to failure as they are not given enough room for decision-making as well as formulating and implementing turn around strategies.
Government should also provide resources to enable boards and management to execute their statutory mandates.
Many strategic parastatals are hamstrung by lack of skilled manpower, resources, debt overhang, poor debt recovery strategies, lack of access to credit lines, low capacity utilisation, antiquated equipment and undeveloped infrastructure, among other problems.
Parastatals such as Air Zimbabwe and Cold Storage Commission (CSC) are reported to be in a debt trap.
Air Zimbabwe has a huge debt overhang of around US$300 million, while the CSC and TelOne debts stand at around US$100 million and US$383 million, respectively.
Entities such as CSC are technically insolvent, which means they cannot service the legacy debt and meet contractual obligations such as payment of salaries.
The balance sheets of most parastatals are unsustainable and need to be restructured to open doors for these entities to access funding through either domestic or foreign credit lines, or to court strategic equity partners.
Reliance on Government bail-outs and subsidies exert pressure on the Treasury and taxpayers.
Unless parastatals are completely restructured and reoriented, the new brooms being advocated for to turn-around these entities will find the going an uphill task. This will inevitably compromise economic development and service delivery, including the attainment of Vision 2030.
Allen Choruma can be contacted on email: [email protected]
